ARCHIVED – National Energy Board - 2016-17 - Report on Plans and Priorities - Section I: Organizational Expenditure Overview

Section I: Organizational Expenditure Overview

Organizational Profile

Minister: The Honourable Jim Carr, P.C., M.P.

Chair and CEO: C. Peter Watson, P.Eng., FCAE

Ministerial Portfolio: Natural Resources

Instrument(s): National Energy Board Act (NEB Act)

Year of Incorporation / Commencement: 1959

Organizational Context

Raison d’être

The National Energy Board is an independent federal quasi-judicial regulatory tribunal established in 1959 to promote safety and security, environmental protection, and economic efficiency in the Canadian public interest within the mandate set by Parliament for the regulation of pipelines, energy development and trade.

Responsibilities

The main responsibilities of the NEB are established in the NEB Act and include regulating:

• The construction, operation and abandonment of pipelines that cross international borders or provincial/territorial boundaries, as well as the associated pipeline tolls and tariffs;
• The construction and operation of international power lines and designated interprovincial power lines; and
• Imports of natural gas and exports of crude oil, natural gas liquids (NGL), natural gas, refined petroleum products and electricity.

Additionally, in specified areas^Footnote 1 the Board has regulatory responsibilities for oil and gas exploration and production activities under the National Energy Board Act, Canada Oil and Gas Operations Act (COGOA), the Canada Petroleum Resources Act (CPRA), and the North West Territories’ Oil and Gas Operations Act (OGOA) and Petroleum Resources Act (PRA).

The NEB conducts environmental assessments during its review of applications for projects under its jurisdiction. For certain projects, the Board also conducts environmental assessments as required by federal legislation, such as the Canadian Environmental Assessment Act, 2012 (CEAA 2012), the Mackenzie Valley Resource Management Act, and the Inuvialuit Final Agreement or the Nunavut Land Claims Agreement. Certain Board inspectors are appointed Health and Safety Officers by the Minister of Labour to administer Part II of the Canada Labour Code as it applies to NEB-regulated facilities and activities.

The Board also monitors aspects of energy supply, demand, production, development and trade. The Board reports to Parliament through the Minister of Natural Resources.

Strategic Outcome(s) and Program Alignment Architecture

1 Strategic Outcome: The regulation of pipelines, power lines, energy development and energy trade contributes to the safety of Canadians, the protection of the environment and efficient energy infrastructure and markets, while respecting the rights and interests of those affected by NEB decisions and recommendations.

Internal Services

The NEB intends to modernize its Program Alignment Architecture and Performance Measurement Framework:

As part of the Chair and CEO’s efforts to modernize our organization, the NEB intends to request changes to its Program Alignment Architecture (PAA) and Performance Measurement Framework (PMF) to make them clearer and more transparent for Canadians. If made, these changes would help better support cost-recovery. These changes, if approved by the Minister of Natural Resources and the President of Treasury Board, will take effect in fiscal year 2017-18.

Some measures in the 2016-17 PMF have been updated to start the transition to a new PAA and PMF structure. Some of the new measures show “baseline to be determined (TBD)” as a target. The NEB will focus on quantifying the data to report on these measures in order to determine targets.

The NEB is a full lifecycle regulator with three key roles. We are an adjudicator of energy projects, we support the safety of Canadians and the environment through energy infrastructure and activity oversight, and we educate and engage Canadians through energy information. The new PAA and PMF will clearly reflect these roles.

By updating our PAA, and developing associated performance measures, the NEB will be able to show closer alignment between these roles and the expected performance of the NEB by Canadians.

This will also support the Government of Canada’s mandate to achieve required public trust through transparent and effective performance measures that will assess the impact of organizations.

Organizational Priorities

Priority: Lead Regulatory Excellence

Demonstrating regulatory leadership will improve public confidence in the NEB’s ability to fulfill its mandate, as well as facilitate stronger coordination and cooperation with our territorial, provincial, federal, and international counterparts. This priority reaches broadly across the entire organization and is based on continual learning and innovation, enhanced evaluation, and improved management systems. Excellence is the means for providing what Canadians expect and deserve: a fair, transparent and respectful regulator that delivers timely, high-quality results.

Regulatory excellence is not a static achievement but a perpetual pursuit. It is dynamic by nature. We are already a strong regulator, and are taking additional steps to define what regulatory excellence means for us as an organization. It is about shaping the NEB into a regulator that continually improves its work, builds strong relationships with stakeholders, and commits itself to serving the public interest. We will undertake a more comprehensive review of our processes and management systems to continually improve our capacity and results as a regulator.

Priority Type^Footnote 2 Previously Committed to

For more information on organizational priorities, see the Minister’s mandate letter on the Prime Minister of Canada’s website.

Priority: Take Action on Safety^Footnote 4

It is important that the NEB demonstrates to Canadians that the NEB holds companies accountable for safety. Actions in support of this priority will increase Canadians’ confidence that the NEB is effectively fulfilling its mandate.

The Pipeline Safety Act provided amendments to the NEBA and COGOA that strengthen expectations for safety and security of regulated pipelines and international power lines. It requires updates to the NEB’s Onshore Pipeline Regulations and promulgation of new regulations with respect to pipeline crossings and damage prevention. The NEB is committed to completing preparation for full implementation of the new provisions by June 2016 as required.

The NEB will continue its work to advance safety culture across regulated companies and the industry as a whole, in concert with effectively implemented safety management systems. This will include formal engagement with industry members and other regulatory agencies.

Emergency management is a key component of the NEB’s safety and environmental protection mandate. The NEB will focus on promoting and verifying regulated companies, municipalities and other first responders have clear and open communication so that they continue to be appropriately prepared for a coordinated and effective response to any emergency.

Priority Type^Footnote 5 Ongoing

For more information on organizational priorities, see the Minister’s mandate letter on the Prime Minister of Canada’s website.

Priority: Engaging with Canadians

There is a need to inform Canadians about the NEB’s role and its processes, and to demonstrate responsiveness and transparency.

Our engagement with Canadians goes beyond that which has been established through and guided by our application hearing processes. This means reaching out to Canadians and presenting ourselves as a whole, not just as the sum of regulatory processes. This means engagement along the full lifecycle of a project, across the whole of Canada, with responsive regional focus, on pipeline safety and environmental issues. It means more effective communication that is tailored to the intended audience, and is readily accessible by any stakeholder who wants it.

The NEB has established regional offices in Vancouver, Montréal and Yellowknife. The offices are part of an initiative to strengthen the NEB’s regional presence, raise awareness about our work, build stronger relationships with regional public and local institutions, communities, landowners and Indigenous groups; and to be in a position to more quickly respond to events requiring immediate NEB attention. These offices build upon our existing engagement efforts and move the organization forward to foster greater public confidence.

Priority Type^Footnote 6 Previously Committed to

For more information on organizational priorities, see the Minister’s mandate letter on the Prime Minister of Canada’s website.

Risk Analysis

The NEB continues to work in a changing environment. The organization’s responsibilities are informed by a wide array of factors including emerging industry developments, the proactive consideration of safety, environmental, societal, and economic trends that shape the Canadian public interest.

The NEB regulates approximately 73,000 kilometers of interprovincial and international pipelines - nearly enough pipeline to wrap around the earth twice. In 2015, the more than 100 pipelines regulated by the NEB, shipped approximately $96 billion worth of crude oil and petroleum products, natural gas liquids and natural gas to Canadians and export customers. The NEB also regulates approximately 1,400 kilometres of international power lines, almost the distance between Yellowknife to Regina. These are owned by over 30 companies and transmitted approximately $3.3 billion of electricity into and out of Canada.

While over 99 per cent of energy products are transported safely in Canada, there is, nonetheless, a possibility that an incident at a NEB-regulated company resulting in serious injury, fatality or significant environmental damage could occur. This risk arises from several factors including the varying maturity of management systems and safety culture at NEB-regulated companies. The safety of Canadians and protection of the environment are the NEB’s top priorities and the risk response strategy in the table above will help the NEB ensure that energy infrastructure is the very safest it can be.

Parliamentarians and members of the public have shown increased and ongoing interest in the energy industry, the safety of pipelines, and the environmental impacts of pipeline incidents. The NEB recognizes these interests and the need to further its communications and engagement efforts to help Canadians better understand energy information, regulatory processes and the role of the NEB as a lifecycle regulator. If the organization does not do this effectively, it runs the risk of inaccurate or incomplete public portrayal of the NEB. To mitigate this risk, the NEB plans to complete a number of actions in 2016-17 including implementing a public engagement framework, increasing its regional presence and providing Canadians with accurate, timely and relevant energy information in new and innovative ways.

As the NEB pursues its priority of leading regulatory excellence, it continues to address the risk that its IT/IM plans and business strategies may not be completely in alignment. Maximizing alignment of IT/IM plans with business strategies is critical to ensure that the NEB can deliver on its program objectives while achieving best value for money and incorporating the evolving mandate of Shared Services Canada. The NEB will work throughout the year to mitigate this risk by utilizing centralized direction and control for managing IT assets, IT spending, technology choices and application development.

Planned Expenditures

The NEB is funded through parliamentary appropriations. The Government of Canada recovers approximately 95 per cent of the appropriation from the regulated industry. The revenues are deposited directly into the Consolidated Revenue Fund. This process is regulated by the National Energy Board Cost Recovery Regulations.

Planned spending in 2016-17 includes $3.3M for our expected operating budget carry forward and $0.9M for Eligible Paylist expenses.

Planned spending in 2017-18 decrease by $19.8M or 21% mainly due to:

• Funding received in 2012-13 to enhance NEB safety and security programs as well as public awareness will cease at the end of 2016-17 ($5.7M) and most of the funding received through BUDGET 2014 for Mega Projects will also cease at the end of FY 2016-17 ($6.35M).
• Decrease of $0.65M in our PFP allocation due to TMX completion in 2016-17.
• The O&M portion of BUDGET 2015 is front-end loaded to ramp-up the Safety & Environmental Protection and Engaging with Canadians initiatives with contracting and training which decreases $4.0M in 2017-18.
• We have not accounted for a carry forward from 2016-17 to 2017-18 ($3.3M) as we expect to spend our full appropriation in 2016-17.
• Employee Benefit Plan to decrease by $0.23M in 2017-18 from 2016-17.

Planned spending in 2018-19 decrease of $1.7M is mainly due to the 5 FTEs re-profiled from 2014-15 and linked to Mega Projects which are expiring and a reduction in O&M from BUDGET 2015 linked to Safety & Environment Protection.

Alignment of Spending With the Whole-of-Government Framework

Departmental Spending Trend

Departmental Spending Trend Graph

The above graph represents NEB's actual and planned spending from 2013-14 to 2018-19.

For 2013-14 and 2014-15, spending represents the actual expenditures as reported in the Public Accounts. For fiscal year 2015-16, spending represents forecasted expenditures as of the end of November 2015. For the period 2016-17 to 2018-19, spending reflects approved funding by Treasury Board to support our main strategic outcome as well as anticipated renewals of some programs sunsetting past 2016-17: Safety Submission ($5.2M) and Public Awareness ($0.5M).

As indicated in the chart above, NEB's forecasted spending for 2015-16 is at par with last fiscal year spending.

Estimates by Vote

For information on the National Energy Board’s organizational appropriations, consult the 2016-17 Main Estimates on the Treasury Board of Canada Secretariat website.

Date modified:

2023-11-27